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I remember when AT&T broke up into long distance and local. Like a lot of people I didn't understand what divestiture was or why I needed to dial a "1" before making a long distant call. I remember going to my grandparents house and using their old red telephone mounted on their wall. Back in those days, those phones were like bricks and they always worked. Sometimes my grandmother would ask me to call someone and when I asked her what number, she'd always says something like "Elizabeth 3" and then the number. I shockingly remember their phone number 353-8872 even though they haven't used that number since 1991 (yes I remember a non-useless phone number that hasn't been used in 25 years).

When I was a sophomore at Rutgers, there was a job fair at the student center and the crowd around AT&T looked like the pit at a Springsteen concert. Finally, the AT&T recruiter yelled "if your GPA isn't 3.5 don't bother dropping off your resume". At the time, my GPA wasn't that good so I walked on.

I did get a job as an intern at AT&T when I was in graduate school. I can still see the job posting and the person doing the recruiting was named Jim Watson and the division was called Business Operations Analysis or BOA. It was an internal analytical group. I passed the phone interview (BTW - my GPA the last two years of Rutgers was over 3.5 and my MBA GPA was very good as well) and was brought into 295 North Maple Avenue in Basking Ridge NJ for a full day of interviews. I remember the interviews and the building very well. I got the job after making a presentation on the predicted value of a Fantasy Baseball player based on their past and predicted performance. I also ordered a beer at lunch not because I'm an alcoholic but because I was stressed out and needed the comfort from a beer. Well I got the job, made it through several downsizes, launched bundled wireless and long distance plans, was one of the youngest Division Managers in the company (a division at the time had about 4-5 direct reports and each direct report had about 4-5 managers or more), and then left after 10 years to get rich on the internet which of course never happened. I still remember my AT&T phone number of 908.221.7723

Fast forward a few years and in 2006 when I was about to be let go from E*trade after their purchase of DLJ/CSFB/Harrisdirect, I set up my home office. I of course got a work phone number, the now defunct 908.876.1149. Add to that my cell phone number and my home phone number so I now have three numbers; that's way too many numbers to reach me at. So when I could, I got a Google Voice number (that was little later); that number is 908.867.8001. The Google Voice number still works but not for the use of having one number ring me on multiple phones but as a filter for calls I receive. Here's why....

In 2006/2007 I remember sitting at my desk working on something or I was on a call and my dad called my mobile phone so I didn't pick up. He then called my office number and I didn't pick up. Dad then called my home number and by then, of course I didn't pick up. Dad then called my mobile phone and left a message. So that's 4 phone calls all ringing in the same office --> Sigh

Around 2008 or so I canceled my work phone number and started using my mobile phone as my primary phone. Unfortunately, I never adjusted my calling plan on my mobile and was getting hit with massive overages but I didn't know. Well I didn't know until a bring your daughter to work day. Kaela was working at home with Mary. Mary was in charge of billing - kind of my CFO for Eric Frenchman LLC. Mary took a look at my AT&T bill and saw a bill of at least $1000 so she sent a young Kaela marching into my office with the bill. She handed it to me and said "this looks a little high". I was confused, called AT&T and found out that the bill was correct and they graciously back dated my unlimited bucket plan, wiping out my overages. So my mobile phone is my only phone number - similar to how my dad used his phone back in the mid-2000s. Yes my dad was ahead of his time in using his mobile phone as his only phone.

So let's skip ahead to 2016. I have a mobile phone and my home phone. The kids have their own phones too. I also have a shore house and there isn't a home phone there because, well, people can call my mobile phone number and reach me anywhere I am. Nobody calls us on our home phone...Well nobody except the schools for school closing and telemarketers - a lot of telemarketers - that bad kinds of telemarketers - the scam artist, the IRS calls, calls that get through the do not call registry which of course I was on from Day 1. The cost of that phone with taxes and fees was about $70 per month. That's right I'm spending $70 per month for telemarketers and scam artists to call and leave me messages. Why would I do that?

So I called up my local phone company and put our home phone on vacation mode for about $14 per month and guess what the telemarketer calls have stopped. The only push back from the local company about keeping my number was for emergencies but the most major emergency we had recently was Sandy and guess what? My home phone didn't work because years ago they switched us to DSL. The home phone doesn't work without power.

Nostalgically, my few month experiment with keeping a phone line just in case is almost up and it's time to ditch my home phone. My dad ditched his home phone about 10 years ago and didn't need it. I no longer get bothered by telemarketers (for the time being) and I don't seem to need it for emergencies. Both kids are in high school so they don't have my home phone for closings and delays. I guess that means, why does anyone have a home phone number anymore? I don't need it. Not sure you do too...

A month or two back fellow Connell Donatelli employee Ryan Waite and I had a conference call with Apple to discuss their iAd platform. For you non-wireless advertiser that's Apples platform for placing their new rich media ads on iPad and iPhone devices. Anyway we have a few clients that could spend money so we thought let's chat.

Apple told us that unless we were going to spend high 5 figures into 6 in one month we couldn't even see a deck on the platform and then Apple told us to go to their lower end Quattro platform. I won't go into much detail what we are doing but let's just say Google has a good platform.

So I'm a little surprised Apple is no longer accepting orders in the early fall. Either they are ready to allow smaller advertisers in or they are letting other platforms take the business. Clearly Apple bought them as a defensive move but it is curious that they haven't announced how to support the non-super huge advertiser.

I was researching a mobile campaign for a new client. I can't go
into details, but let's say that Google Maps is an important application for them so I clicked on a text ad to get more details on Google Maps and I saw this chart which got me thinking. Why doesn't Google provide Business Reviews, Biking Directions, Latitude, Layers, My Maps, and Starred Items for iPhones yet provides them for Blackberrys, Nokia S60, and Windows devices? Is this chart a typo or is Google purposely trying to make iPhones look the worst of any devices when it comes to Google features?

Seriously, you don't have to look very hard to see that the iPhone appears to be the worst device on the chart. Is this what Apple vs Google has come down to? Google penalizing Apple device users yet supporting Windows based phones? I get saving special features for Android devices, but purposely penalizing a device that people love the most? This doesn't seem very Google like and it appears to be purposely evil....I hope/wish this chart just hasn't been updates because it seems quite sad....

Yes you've seen the ads already. Verizon's Rule The Air seems to be one of those advertising campaigns that is easily ignored and tries to make you think what that logo is. I think it will be gone within a year and it would have been sooner if Verizon wasn't a big slow moving telecommunications company. I worked at one for 10 years so I have an idea of how this works.

Big agency convinces the marketing communications director that Verizon needs a new ad campaign (which they don't). It might have even been after a review or new creative account. The agency puts together some concepts and then off to focus groups where junior marketing folks tally talking points and after 2 weeks the results come back in and this concept is the winner.

So it takes Verizon months to clean out collateral get service reps changed and then do the photo shoots and creative ads in place. Millions of dollars has been sunk into this. However at the end of the day, marketing is measured on sales, churn, and average revenue per minute. It will take a few months to get the data and make a decision but it will be the holidays and too late to switch it out.

Do customers want to rule the air waves? No. We want phones that work and data connections that are fast. I'm not trying to rule anything. Verizon still had the perfect ad campaign given AT&T's issue which is/was the " can you heat me now" campaign but the ad agency isn't paid to extend the life of that campaign but to come up with new ads.

I've seen this movie before - it was called AT&T 's the iPlan famous for AT&T employees saying "what the heck is that". (Seinfeld reference = the Show about nothing). The only thing that will save The Rule The Air campaign is a Verizon iPhone.

Yesterday evening while waiting for my grill to heat up, I turned on my SkyGrid app on my iPad. The number one most talked about story was about the FCC reviewing the wireless industry practice (or lack of) on cell phone bill shock. You know the shock you get from a big bill when you aren't paying attention to your wireless usage especially when you are traveling internationally.

Now, I already had my own bill shock surprise not when travelling overseas but just using my wireless phone.You see when I first signed up for AT&T I didn't get an unlimited voice plan, but now I
love my iPhone so much that I started using it for all of my calls. My wife pays the bills and didn't pay much attention to a $500 bill, but when it hit $1,000 I called into AT&T. They were great and credited my bill basically the full amount over the two months minus the cost of an unlimited plan. Also, when I do travel overseas I get the international wireless data plan, but even that is just good for email - you open up an app and wham - you download a ton of data.

Anyway, I didn't pay much attention to the articles because I've had my personal experiences and I can see the bill shock problem for customers and even though I'm an ex-AT&T guy, I actually agree with the consumer. My own experience with AT&T was great, but then again with a little advanced warning I might have caught it early. Well today, I received this email from AT&T regarding Travel Tip for Your iPhone which I found the timing very interesting.

Is this just a standard email sent out by AT&T? Perhaps, but then again I think they know this is my second iPhone. However, even if this was already a planned email, did AT&T notice the buzz yesterday and decided to be proactive and send out this email?

I think the answer is Yes. I have to believe AT&T has buzz monitoring services and someone at AT&T must have had their own SkyGrid type report and decided this email should be sent out on the heels of the big news story. I think this was very smart political rapid response which is something I know a thing or two about. I think they would have been perfect, if they were running some paid search ads or had some sort of website devoted to tips for fighting bill shock, but the timing on the email was beautiful. Nicely done.

Yes, I love my new iPhone. Yes it is on AT&T's network and it works great for me. All of the reviews I read there were a few that said Apple made some hardware changes that should help with the drop calls, but I've experienced very little of them around Long Valley. So after a day, here's what I like....

Love making folders so I limit the amount of screens.

The design is much sturdier than previous ones. It is like walking around with a piece of steel in your pocket (yes pun intended).

The screen is much brighter and easier to use.

Love having the video camera; I haven't tried the video chat yet because I'm too cool for my friends and families.

The email interface also seems a lot smoother

I like the voice commands even though every time I say Play Bruce Springsteen it ends up calling someone I havent spoken with in years

The compass will be very helpful when I'm lost

The video editing app looks easy to use

The battery life seems longer

In my opinion, it is a winner. Between the iPad and the iPhone my mobile life rocks. Hopefully, you folks can see past the AT&T issues and get this awesome phone

(UPDATE FROM WALL STREET JOURNAL 6-17. Notice again how it is AT&T's website that had the problem. No mention of the problems with Apple's website)

In this morning's Wall Street Journal I saw this article which in my opinion unfairly targeted AT&T. Yes I wrote unfairly targeted AT&T. Does AT&T's network have trouble? Yes. Did they have a breach in security? Yes. Did I have the most trouble with them while trying to order a new iPhone? No.

Apple's site was the dog not AT&T's. I was able to upgrade my account and put the phone in Apple's shopping cart. Unfortunately Apple took hours to process and it was only due to my persistence did my order go through. It reminded me of trying to order tickets to a Springsteen concert via TicketMaster (BTW - it never works). I kept getting site errors, crashes, unable to process messages, etc. All on Apple's site.

And that's what's so interesting about AT&T's problem. Even when it is Apple's fault AT&T gets the blame. AT&T can't win this PR battle because Apple is still cool and AT&T is still old and monolithic. Plus, all iPhone users seems to blame AT&T's network for any problems. However, if you dig a little deeper you'll find some people grumbling about the iPhone causing some of these problems. However, all you read is AT&T's bad and Apple good even if Apple causes the problem. Talk about a PR nightmare for AT&T.

Those of you who read this website might not know that I worked at AT&T for 10 years. In fact, after my first year of graduate school I started as an intern at an internal consulting group called Business Operations Analysis - kind of a nerd factory of nerds that was even part of Bell Labs for a short while. After about 4 years in BOA I joined the consumer marketing groups and stayed there for about 6 years progressing up the ranks to Division Manager of a 25 person group called eAT&T or OneRate Online. I dropped a lot of direct mail (probably about 100 million) and made millions of outbound telemarketing calls over those 6 years of marketing.

One of those campaigns was for a product called TrueConnections. TrueConnections is/was a follow-me 500# so that your callers called one number and you could program the number to ring at various numbers you owned. Of course AT&T charged you for it and back in the mid 90s it seemed pretty cool, but as I recall it was too niche of a product targeted at Road Warriors and we didn't sell many plans. Personally I didn't really use mine and didn't have much use for a product like that until last week. That's when I got my Google Voice invite.

Now some of my AT&T brothers and sisters will turn their noses up at this product and when it first came out I didn't care for it either. However, after setting it up last week I'm hooked. Here's my experience with it so far:

Domestic calls are free. I get that - no big deal, but if you don't make international calls, what's better than free?

Yes there's some issues with making calls on its network using your iPhone but I don't care. I have one of those all you can eat plans with AT&T and have some rollover minutes. I want Google Voice for the inbound calling features, not the outbound so the iPhone fight doesn't impact me.

It took me about an hour to pick out my number. You can try coming up with a vanity number but I couldn't come up with one I liked, besides I'm not convinced a vanity number isn't a pain for dialers. In the end I chose a local number that I think is easy to remember - 908.867.8001.

Setting up which numbers ring when you dial my Google Voice # was a piece of cake as is the user interface.

Ok - then came the time consuming part which took me about 2 hours. In order to really get some use out of Google Voice you need to organize your contacts and put them into groups. Each one of these groups can have different ring options and different voice mail greetings. For example:

Vendors that you don't want to hear from go straight to voice mail

Friends and Family ring my three numbers, but the home phone only rings after 6 PM

Connell Donatelli and Campaign Solutions co-workers get a special greeting

So after a few hours of organizing my contacts and then a few minutes setting up my voice mail greetings I experienced the last really cool part (so far) of Google Voice. After someone leaves you a message you get an email or a text message notification that you have a new voice mail. And, if that isn't cool enough Google does an ok job of transcribing the voice mail into text. My experience with it so far is that this feature isn't something to rely on but cool none the less.

A single number for people to call you on for free? Email notifications, transcription of voice mails to text, and individual greetings and call routings by group - those are a lot of cool features.

Like most sports fans I'm sick and tired of the Brett Favre stories. I'm not sick and tired about whether he is going to play again; I'm more sick of the teary goodbyes when he announces his retirement (see this video when he starts breaking up around the 27 second mark).

Anyway, I also started thinking, if Brett Favre wants to come back, why shouldn't he? After all...

His whole life revolves around football

He's been playing professional football for 17 years and if you add in college that totals 21 years

He is still productive even though he has slowed down, after all he is almost 40

Has never missed a game in his 17 years

Companies still want him around as do his customers

That started reminding me of my former AT&T associates especially the ones that are still there. My old advice on this was that these employees should get out of that place because it is in a death spiral especially if you are located in NJ. Friends of mine that got out of there are doing just fine proving that there is life after AT&T. Some folks that left and took jobs with other NJ telecommunications companies (ex - Lucent) typecast themselves even more when they didn't learn new skills or a new industry. I often felt bad for these telecom drones in addition to the NJ employees of AT&T. Now I've had a little change of heart.

You see the old AT&T demanded a lot of your time, commitment, and most importantly loyalty. Nearly all of these employees gave it and in return we built friendships that lasted forever, had good jobs, and great rewards. A lot of people married co-workers ensuring AT&T talk and thoughts 24/7. Some people built skills by taking different jobs within the company and they used these skills when they quit or were laid off. Some folks still cling to their former cubicals. BTW - my wife and I still remember my telephone number from Basking Ridge (908.221.7723) even though it hasn't worked in 9 years.

Anyway back to Brett Favre and the obvious link to AT&T. Look if you like your job, you are still good at it, your customers and co-workers still want you, why shouldn't you stay there? As long as you can still perform and someone wants to pay you, what's wrong with staying in the ONLY JOB YOU'VE EVER KNOWN? Nothing. Nothing wrong at all.

I've been testing out my iPhone for about a month now and my conclusion is that the iPhone is by far the greatest cell phone currently on the market, but AT&T's network is either the worst or the best depending on where you are. And before you flame me for not knowing anything a little back ground first. I worked at AT&T for 10 years and pioneered from a marketing perspective marketing bundles of wireless and wireline communications starting in 1995. The program I volunteered to work on called Cheetah in 1995 is widely considered the first marketing of a free cell phone for a new account.

Well driving around to NYC the past few days I've noticed that AT&T's network still SUCKs on Route 78 and Route 287. It is so bad, that I've begin to seriously doubt AT&T's claim of of More Bars in More Places. They may have more bars, but that doesn't stop the calls from being dropped. Around my house, in my town, and neighboring towns the service is crystal clear, but once I get on one of those two highways, my old Verizon phone works a lot better. Plus, on a recent trip to DC the iPhone was unusable but Verizon was fine.

Net, net around my home in Long Valley and Chester NJ the AT&T/iPhone is awesome, but once out on the main roads, Verizon seems to be a better shot. The phone itself is something that I can't put down and often replaces my laptop even in my house. AT&T's 3G is blazing fast when you get it too. For me, unfortunately, I'm a two cell phone kind of guy now.

I worked for the old and better AT&T for 10 years and it was on retention marketing. Those years were during the the great winback wars with MCI and Sprint where a new customer could get $100 or more for switching back.

You remember those days? You had to stay for 6 months and then you could start the process again. People would complain that as a long time customer they couldn't get a check or at least a good offer. Well here's why and why I wonder how Obama will measure saves - saved jobs that is.

The reason a new customer got $100 is because all of their revenue was new and the business case worked as long as they stayed for 6 months or so. Winback = new job created by Obama's spendulus plan. On the retention side you never knew who would leave AT&T so you applied our customer leave rate and came up with a number of potential people who would leave. This number was then multiplied by a save rate (% of people who would stay because of an offer) and this number was who we saved. Think saves as jobs saved by Obama's spendulus plan.

So the reason winback got better offers was because their entire new revenue was put up against the cost of the offer. Retention offers were much worse because you could only apply the full cost of the offer against a smaller % of the people that received it. Measuring winbacks = easy count, measuring saves = derived number with a lot of assumptions.

However, what happens if it doesn't grow jobs? Then how do you measure saving a job? Is that saving one from going overseas? How do you know a job will leave? How do you know a job will go away? If all of those PHDs at Bells Labs couldn't figure out who is likely to leave a telecommunications company does anyone really think the Government can figure out which jobs will leave?

I worked for the old and better AT&T for 10 years and it was on retention marketing. These years were in the great winback wars with MCI and Sprint where a new customer could get $100 for switching back. You remember those days? You had to stay for 6 months and then you could start the process again. People would complain that as a long time customer how come they couldn't get a check or at least a good offer. Well here's why and why I wonder how obama will measure a saved job.

The reason a new customer got $100 is because all of their revenue was new and the business case worked as long as they stayed for 6 months or so. Winback = created job. On the retention side you never knew who would leave AT&T so you applied our customer leave rate and came up with a number of

Yes, I did not buythe new iPhone. I do believe it is the coolest phone on the planet and for that price it is off the charts a great value. However, as I've written before the problem with the iPhone is the AT&T Wireless network especially in the areas where I use the phone the most.

Since my Dad died (thanks for the comments) I've had to carry around his cell phone. He also had a huge amount of monthly minutes with a ton of rollover minutes (more on that in a second). So I've been trying to use his phone using AT&T's voice network. You know what I found out? It sucks in the areas I make calls. Washington Township-Long Valley NJ, spotty coverage. Route 78? Stinks with plenty of dropped calls. Route 287? Almost as bad. County Route 517 - useless. Heck I could put up with all of that until my boss Becki called me from a train ride she was taking between NYC and DC and she couldn't talk for me for more than 1 minute without the call dropping or the quality degrading so badly it was totally useless. And, that was on her iPhone. So for where I make my calls AT&T's Wireless Voice network is substandard.

So I turned back to Verizon. After a ton of research I settle on the Verizon Wireless XV6800. It isn't an iPhone but I love it. It connects to WiFi networks and has a nice large screen. It comes with a ton of features and is Windows based so it feels familiar to me. It comes with Microsoft Office and syncs nicely with my Outlook. It has a slide out keyboard and the phone automatically rotates the screen which makes for easy web surfing. I bought a 2 GIG data card for plenty of music and video files. However, the best thing about it is that I get to stay on Verizon's Wireless Network where my CALLS GO THROUGH AND I CAN TALK WITHOUT DROPPING OFF (Can you hear me now AT&T?).

If you need a new wireless phone and you are in the areas that I frequent, the iPhone is sexy but the AT&T network is a hag. Go with a brand new Verizon phone like the XV6800. BTW - the rollover minutes was a plan idea that was very similar to one I cooked up while researching new wireless bundle plans for the old and better AT&T. I called it the EZPass plan and it was credit card based. We tested it in focus groups but it didn't really pop probably because we didn't cook up the name of rollover minutes which is brilliant.

I saw this article in Wednesday's Wall Street Journal called Bye Bye Light Bulb and it got me thinking about AT&T's TrueVoice "product". Basically the article says how lucky manufacturers like GE and Phillips are that the US Government passed a law to outlaw the old version of the light bulb in favor of energy saver versions by 2012/2014. These new bulbs already available on the market costs $3 instead of the 50 cents for the old ones, but theoretically save you money in electrical bills. According to the article:

"Yes, the $3 bulb lasts longer. Yes, it cuts your electricity bill. Mr.
Moorehead says that when every one of those four billion light sockets
has an energy-saving bulb in it, the country will be saving $18 billion
a year on its electric bill. That's $4.50 per bulb -- and the bulb
makers are standing by to make sure a substantial portion of those
"savings" get transformed into profits for them."

Wow isn't that convenient. A product that nobody wants (5% market share) convinces the government of passing a new law and wham, you have instant product sales. Now, the problem (and the link to TrueVoice) is that their selling proposition is that these new bulbs will help you save money on your electrical bill. Pay more upfront for future savings, but if the savings was so good why aren't the sales there now? Perhaps the American public doesn't want to pay for phantom product results. Now to AT&T TrueVoice.

When I first came over to the marketing side at AT&T they were promoting TrueVoice. TrueVoice which as I recall was being promoted by a new AT&T Marketing VP Dan Clarke as producing better call quality from your home phone. This call quality proved by Bell Labs would allow AT&T to charge more money for a long distance call. Problem was customers didn't think their home call quality was bad and when compared with the competition MCI and Sprint (remember them) the difference wasn't discernible. Sure Bell Labs could prove it, but people just didn't care. And, AT&T stopped promoting it because it didn't make a difference.

Unlike the light bulb guys, AT&T couldn't have the government mandate acceptable call quality. Think about it. Companies that have products that you just buy and are tough to differentiate (milk, light bulbs, pencils, coffee filters, home phone service) just need to somehow convince the government that it is to the American people's benefit to own their new product instead of the old one. Think Organic Milk industry. Having the US Government speak up on an industry's sales woes is a true voice that anyone can hear a difference in.

I have to be blunt; I'm very confused and a little upset over what Kevin Martin at the FCC believes is good competition and what is bad competition. I'm reacting to today's editorial in the Wall Street Journal called The FCC Plays' "Monopoly" which of course could be just opinion, but there are certainly some scary points raised in it:

Chairman Martin plans to push a slew of new regulations on cable operators

he wants to force cable companies to reduce, by as much as 75%, the
already regulated rates they charge to lease channels to programmers

is expected to show that cable has finally reached the 70% threshold
that gives the FCC the green light to impose more regulations. Mr.
Martin achieves this result essentially by cooking the books. He has
cherry-picked data and single-handedly changed the methodology for
determining penetration rates.

Now, I'm certainly not a lover of cable service and in fact hate their service and prices and haven't used them for almost 10 years; opting instead for DirectTV. Yes, I have a convoluted system for these services. I use DirectTV for TV, Embarq the worst brand name ever for phone and DSL, and Verizon for wireless.

In beautiful Long Valley I have no choices for phone service. I can choose Embarq which I did or crappy cable. Oh and if you've ever tried to call me on my wireless phone when I'm home you know that if the phone rang at all you were greeted with more static than you'd hear by listening to WFAN in a lightning storm. That's why I've written over and over again how the FCC and Kevin Martin don't understand the telecom industry and why consumers are getting charged more money for terribleservice. Now, not to be outdone, the Wall Street Journal wrote today "we're beginning to wonder if the head of the Federal Communications
Commission knows the first thing about the cable industry he regulates."

Can cable use a little bit of a hair cut on their prices? Sure. Same with your local phone company. Can cable use more competition? Sure, but unlike the local phone market where there isn't any competition, you at least have two satellite providers and perhaps a local phone company fighting for your TV viewing time; and that's not all if you want to count watching TV programming on the internet.

There is way more competition for your cable time than your local phone service. Not sure why Martin wants to squeeze cable companies more than he does with local phone companies. I guess that's what has me so confused regarding what he chooses to regulate. BTW - MarketWatch has more detail on Kevin Martin not getting much support for his initiative and where the data is coming from (not to be used by the FCC according to the source)

I laughed out loud when I saw this article in the New York Times called AT&T Is Latest to Sue Vonage Over Patent and also this other article in the Wall Street Journal. I laughed not because another teleco jumped in to sue Vonage, but because I was wondering what took AT&T so long to jump in for the the fun. You see back when I worked at the older and better AT&T I saw the Product Management plans for AT&T's IP Telephony product which I believe was called at the time Click2Dial. That would have been around 1999 or so and maybe even as early as 1998.

The plans were very complicated and involved a PC with a 2 phone setup. AT&T of course marketed it with our old narrow band product AT&T WorldNet which I believe to this day still has the same amount of subscribers as it did back then which was around 2.1 million. AT&T's product at the time was way ahead of itself relying on very very techie folks who also happened to use WorldNet (kind of an oxymoron wouldn't you say). I remember getting the plans because the Product Team was trying to find ways to cross sell the product with little marketing and I was running either our wireless bundled marketing campaigns or what we called eAT&T which was a strategy to try to get customers to sign up for LD and/or online care and billing via the internet. Needless to say, I don't remember ever dropping Click2Dial into any plans of mine because the target audience was so small and the product was so complicated back then.

AT&T had the plans and the product back then and it was widely known through out the halls of Basking Ridge NJ. So, while you normally would think I'd be gloating about another nail in the Vonage coffin, but even I a frequent Vonage basher has to wonder what took the new, new, new AT&T so long to figure out whether they should sue Vonage. Sure AT&T claimed they were negotiating with Vonage for 2 years but now they were forced to sue. Me, seems like somebody there decided it was better to get a piece of whatever is left before someone else puts Vonage out of business.

OK - it has been trading in the $1 range since Wednesday and I think it is safe to say, you can remove it from your radar screen. I don't know about you, but I'm tired of all the posts I've made for the past two years on them even though they were some of my best. I'd list them all out here, but that seems like a waste so for the full posts hit this link. However, my first post What The Vonage was one of my favorites.

Just as their stock started trading on the $1 range they started a blog banner buy which is
very funny and a little interesting. Very funny because their ads are running on my blog right now (see screen shot), but what makes it interesting is if this is a last ditch effort to keep their once mighty ad spending going or are they trying to reach out to some influential bloggers. Usually when I advertise on blogs its because it is either a) cheap or b) I'm targeting a certain group of readers and bloggers.

Well good luck to some of my former AT&T comrades that are working there now. It is a real shame the executives mismanaged this company; it could have been a great place to work in NJ. Oh speaking of NJ, I'm off to Springsteen's rehearsal show at Continental Arena.

I saw this article in the LA Times called AT&T Changes Cell Ad Mantra and I had to laugh while kicking myself at the same time. The article writes this in case you don't want to signup for the free subscription:

AT&T's boast was about "fewest dropped calls" -- until recently.
Now, it's about "more bars in more places."Why did AT&T ditch its long-running advertising campaign? A spokesman for the wireless unit of AT&T Inc. said it was due to a
decision to focus on coverage, "because this is what our customers tell
us over and over again is important to them." Ira Spiro, a West Los Angeles lawyer representing an AT&T customer
in a federal lawsuit against the company, called that explanation
"folderol."The hostilities over fewest dropped calls -- which sent AT&T and Sprint to court last year -- continue.

OK, so why did I kick myself? Well when they first started to promote "fewest dropped calls" I tried looking for the survey that they were backing the claim up with, but couldn't get access to it. After hours of searching, I finally came close to an AT&T press release and gave up when I couldn't find the actual study. I also trashed my post which was basically going to say "see how the new, new AT&T plays around with data" because I couldn't back that claim up. Now obviously the LA Times has better resources and was able to put out the post I couldn't.

OK, so why did I laugh? Of course I never believed that claim. I personally (on the marketing side) led the marketing of AT&T's first direct mail (and OTM) campaign promoting their wireless service during the project code named Cheetah and as you can see from my Why AT&T/iPhone Won't Live Up to The Hype post, I thought AT&T's biggest problem was their shaky network. All you new iPhone/AT&T users see what I mean by shaky network; that's why I didn't buy the iPhone and won't until Verizon comes out with a clone or the iPhone somehow ends up on that network.

Since I was on that AT&T wireless bundling team from 1995 - 2000 or so, I had an AT&T Wireless phone, but dropped it when I was traveling back and forth to Jersey City while with Harrisdirect. AT&T's less than stellar network kept dropping my calls on Route 78 in Newark. I've been using Verizon ever since and will not switch until their network has trouble...Wireless service is about the network, phones come and go.

So what else is funny? How some lawyer at AT&T probably got suckered by the marketing
team into allowing these ads. I of course know nothing on how the new, new, AT&T works, but back in the Long Distance wars of the 90s the lawyers took claims very seriously and you couldn't run an ad like this without supporting documentation that would stand up in court. Plus, as I recall the old and better AT&T had an arbitration agreement with MCI and Sprint to defend claims without going to court.

Surprised that the claim isn't running anymore? You shouldn't be especially if you bought an iPhone and are not stuck with AT&T's network and sub-par customer service.

This new, new, new really it is new AT&T is quite an out of control beast and resembles nothing of the old and better AT&T I worked at for 10 years. Sure we cared about making money but everyone I worked with bled AT&T blue and actually cared about what consumers thought and the type of service they receive. Not this one. This new AT&T is a power hungry, consumer controlling, regulatory evading, anti-competitive corporate monster. The new AT&T:

Now you can add censorship to the list of anti-competitive and anti-consumer issues with this new powerful AT&T. You can read the post from Pearl Jam to see what happened and how dangerous the new AT&T is; Pearl Jam does a far better job than I can in expressing what happened at the concert on Sunday.

Back about a year ago I wrote a post called Since When Has The Net Been Neutral which contained plenty of great comments. Basically I argued that with less regulation and more competition the network owners should be able to charge what they want; however, that is not the world we live it today courtesy of AT&T and the FCC. Yes, your world of no competition delivered to you by AT&T.

See, with no competition for your household you are beholden to a company to deliver your services and things like accidental censorship can happen. How easy was it for someone to cut off the concert's feed? Seems pretty easy. Heck, even as the AT&T spokesman said they were looking for profanity that's a problem for me too. Determining what someone watches or listens to, should be up to the adults not the job of the FCC, AT&T, or any other centrally located body. It is a parent's job to control what a child watches, not some person working at AT&T that needs a job. The FCC should set ratings and guidelines so that parents can make informed choices.

The heart of Net Neutrality comes down to no competition at your household so a company can control pricing and content. The way to guard against this problem is to increase competition, not stifle it which has not been this FCC's track record. Don't be so relaxed to think that everything is fine in the country as long as you can make a call. Watch what is going on and don't be fat dumb and happy and just pay your bills. Keep your services separate if you can and continue to shop around. The only way to make someone like AT&T feel some pain is to turn away their products and offerings - even if that means waiting for an iPhone clone from Verizon. To a company like the new AT&T, we are all just human batteries powering the AT&T Money Matrix.

You can see this engadget poll of the number of people that have had trouble with AT&T activating their phone (no surprise for people that have dealt with AT&T for a while). The poll is running at 38% of the people have problems. Finally, you can read more about problems if you hit this link from B.L. Ochman who has a nice summary.

I wrote it before and I'll write it again. iPhone will be a big deal for Apple and a big problem for AT&T.

Now that everyone realizes that you need a 2 year contract with AT&T to get the new iPhone and it will be extremely difficult for current AT&T/Cingular customers to get it, the complaints have already started. See this post from Om Malik at GigaOM called No Contract, No iPhone for You.

Simple reason you see. AT&T makes less money when an existing customer gets the phone. They don't get new revenue on the books. Sure there is a retention play, but that is hard to prove the value of it. Sounds ridiculous I know, but the quant-jocks at AT&T assume that x% will leave anyway and in order for a retention play to work, it needs to significantly lower the amount of people that would have left anyway. That my friends is called a Save Rate and it is hard to prove out significantly.

What got me fired up on my train ride back from DC was when I read this article by Amy Schatz from the WSJ called Television Violence gains Focus in Congress. Amy wrote a good article, but what surprised me the most was that it was buried on page B4 in the bottom left almost like the Journal didn't think it was very important. What kills me the most about this crappy Kevin Martin idea is what they think should be censored or not. If this Rockefeller Censorship Bill would pass it would give new Censorship Czar Kevin Martin the ability to enforce rules on airing violent programming between 6 am and 10 PM when children could be watching. It would exempt sports, news, and documentaries.

IF THE FCC WANTS TO PROTECT KIDS IT SHOULD NOT EXEMPT ANY PROGRAMS. I
wonder why they decided it? It couldn't have anything to with a lobbyist or two could it?

NEWS IS THE MOST VIOLENT SHOW ON TV. Check out this link and picture from Channel 7 in NY for tonight. What's there? Beatings, Iraq war, kids dead in a car crash, police dog kills another dog. All great headlines for your pre-schooler right?

AND DON'T GET ME STARTED ON DOCUMENTARIES. THEY ARE VIOLENT TOO. WHY DID YOU THINK DAVID CHASE USED THEM IN THE SOPRANOS?

That's the problem with bills like this. The Government should not be intervening and deciding what is violent or not. They should set guidelines and ratings that inform parents about what they can expect. When the Government decides that News and Sports are exempt it is their attempt to control what you should see. Let me repeat this. NEWS IS THE MOST VIOLENT SHOW ON TV BECAUSE IT IS REAL.

As the folks over at televisionwatch.org have written 92% of parents believe they should be the ones who control the TV not the Government. There is a ton of information on their site including polls and tools for parents. Get involved. Do something other than lay on the couch and let Rockefeller and Martin control your TV. How about something simple as write your Senator? You can find the list and contact information at the NRSC.org website.

I saw this post today from GigaOM who always does a fine job of reminding me to make a post on Vonage. Om Malik points out the Vonage has a $3.99 per month save offer for current clients as well as outlining why Vonage is nearing the end. BTW, that save offer is probably there so that when they start to go under they can keep a few customers on the books for the acquiring company.

Anyway, I checked in with the WSJ and it really looks like they are at the end with their current defense of "oh we believe the judge gave bad instructions to the jury but didn't object at the time because it wouldn't have mattered anyway". That's the same sort of line when your boss yells at you for not pointing out something to them or your wife yelling at you and you just want to crawl away and hide.

I wonder why one of the judges asked if there was some middle ground? Who cares. Seriously. If someone broke the law and then milked millions out of people who bought their worthless stock, than why shouldn't it be allowed to go under. Its about time they get what they deserve which is a little payback.

On the eve regarding AT&T's big launch, I thought I'd give you my opinion why the iPhone can't possibly live up to the hype for AT&T. However, before I do, let me give you readers a little background on my favorite subject me, so you don't think I'm some blithering idiot blogger who doesn't know anything about wireless. If you already know, feel free to skip the next paragraph.

From 1995 through 1999, I was part AT&T's Wireless Bundling Marketing team that was charged with marketing AT&T Wireless Service to AT&T's Long Distance customer base. My group was charged with running the direct marketing (yes Direct Mail and Telemarketing), working with AT&T Wireless to generate wireless offers, developing bundled offers (free phones, 30 free minutes of LD minutes per month, bundling the bills), and other marketing functions. Back in Basking Ridge NJ people among other less flattering names, used to call me Bundle Boy and my marketing plans dropped millions of millions of direct mail per year and made millions and millions of outbound telemarketing calls. It was quite an operation until AT&T Wireless built their own capabilities and we all moved on. I signed (not my real signature) almost every direct mail piece that was dropped and you can see the picture on the right from the original mailing in 1995.

My Top Reasons Why AT&T/iPhone Can't Live Up to The Hype:

$499 price point: That's a non-starter for a tremendous amount of people (consumers). 18 months ago I shelled out $500 for the Treo 700W because I could expense otherwise, I never would have paid that much for it.

Monthly Fees: You need to get a voice and data monthly plan and that costs more money per month.

It's The Network Stupid: No matter how great the hardware, it has to connect to the wireless and data network. I dropped AT&T Wireless about 6 years ago because it couldn't hold my signal on Route 78 while I drove past Newark NJ.

The other wireless companies aren't going to sit around watching their customer fly out the door. See this article from Walter Mossberg at the WSJ. They have a smaller window of opportunity than past years.

Wireless is a complicated business to switch carriers. You have contracts, phones, calling plans, data plans, call quality, and etc. Back in the day, AT&T Wireless thought that "antenna chasing" was too difficult a process and it still is. Besides, it isn't like a large % of these 1 million inquiries that AT&T is promoting will turn into customers; it doesn't work that way off of requests for more information.

Apple is almost in a no-lose scenario, but AT&T looks like it can
be the big loser here. Apple is entering a market it isn't in
today so even if it doesn't live up to the hype it can still boost its
earnings. Meanwhile, AT&T can take it on the chin because they are:

Paying for the TV commercials (it appears that way)

Has customers in place that will migrate

Gets stuck servicing them because you have to figure out is it a network problem or a phone problem

The customer migration issue is a problem because in the wireless business you need NEW customers to help pay for the price of the phone; re-upping existing customers on plans, while good for customer service, has less of an impact on the income statement

I thought the world has moved away from one hit wonders into more of a Long Tail of Marketing? I believe in the Long Tail and with all of the reasons above, I think they have an uphill battle to please an enormous base of customers.

How many IT departments out there will allow them on their platform?

Anyway, my prediction goes like this. The iPhone is an absolute home run, heck a grand slam for Apple. They get into the market and provide a great product; so they are starting virtually from scratch and have nowhere to go but up. Demand too large, they say "oh sorry" and the hype builds more. Meanwhile, AT&T takes it on the chin for building too much demand with TV ads, internet ads, radio ads, stores, direct mail, print, heck anything else they can stick a message on. Plus, too much of the base migrates which adds pressure to their numbers or worse yet, the base gets pissed off because they can't get a phone.

In the end, Apple WINS BIG and AT&T BARELY SURVIVES until a cheaper phone shows up.

I read this week's BusinessWeek cover story called Telecom: Back From The Dead and I couldn't help notice how they glanced over the RBOC's shrewdness to get rid of their only real competition for wireless and wireline - the former telecom providers like AT&T, MCI, and Sprint. Here are a couple of excerpts from the article which got me a little fired up:

If the old telecom
world was dominated by bloated regional monopolies, the new world is a
competitive mosh pit stocked with sinewy players. That's reflected in
how much more productive the industry has become. While telecom
revenues are now 19% higher than they were in 2000, that money supports
just 1.1 million workers, down nearly 30% from boom-era levels. "It has
gotten unrelentingly competitive in every area: broadband, land line,
and wireless," says AT&T's new CEO, Randall Stephenson.

For the big carriers such as at&t, Verizon, and Qwest, the main
challenge is to slow defections of traditional land-line customers
while producing faster revenue growth in new markets such as wireless,
Internet service, pay TV, and advertising. The carriers must overcome
their reputation for being "dumb pipes" and prove they can fill their
networks with innovative bundles of products and services that strike a
chord with customers-

I really beg to differ with the new, new AT&T's new CEO Randall Stephenson. There is less competition for the services he's mentioned not more. His comments are ridiculous and just political spinning so they can go out and gobble out more companies whenever they can while the FCC barely pays attention to their own data. There may be competition on the data and infrastructure side which is outlined in the article, but there is no competition less than 30 minutes from the old AT&T's and now current Verizon Corporate HQ in Basking Ridge NJ.

The article lays out the RBOC's strategy for the past 10 years as shown on that second paragraph above. (My words first) Get rid of the real competition so that it is easier to slow defections of traditional land-line customers
while producing faster revenue growth in new markets such as wireless,
Internet service, pay TV, and advertising.

Back in my earlier career at AT&T, we were taught the 5 P's of marketing: Product, price, place, promotion, and POLITICS. There was plenty of marketing back in those days - do you remember them? The phone calls, the offers, the price wars, and etc. Those are gone? Why? Because the Baby Bells were better than the old AT&T, MCI, and others in working the political angle and the RBOCs were able to enter the LD/Internet market while making it nearly impossible and costly for the LD competitors to get into their market. Now a few years later, they don't market unless it is a new service and certainly don't spend any time on wireline programs. That world is silent.

Is the country better off? I don't know. Again, back in the day, there were grumblings that people didn't want to deal with switching providers and it was all just a game. Well a few years later, the game is over and the RBOCs face no battles over their turf. This allows them to expand and spend on new areas, while it totally turns wireline into the cash cow that they always thought it should be. They get to set prices at whatever they want, cut back on headcount, lower marketing all while spending in growth areas. That's what brought them back from the dead.

Don't believe me? Well ask a veteran of the telecom wars from the 90s. Need something recent? Check out this interview with AT&T new CEO Randall Stephenson where he slips up (yeah right) and says IPTV will be our next
multibillion-dollar revenue stream. We're working hard to have the
largest video platform in the U.S.[AT&T later clarified to say
that statement applies only to the states it serves.]. They only need to focus on their own area which is a huge competitive advantage and that's courtesy of the FCC.

This morning I walk out to get my mail and I find a tiny postcard sticking on the side of my mail box. And, great news its from one of my least favorite companies, the New, New, New, Gosh We Just Rebranded Cingular to be Associated with Bad Customer Service AT&T. In this postcard is a clever announcement (we used to call them tombstone ads) that effective July 1st 2007, AT&T's Carrier Cost Recovery Fee will increase to $2.39. Yes. $2.39 just so they can do what? Pump up their payments to former competitor squashing retiring CEOs $100s of millions of dollars. Seriously, what reason can AT&T have for raising this fee or having it in the first place?

Well, they give you all of this mumbo jumbo to make it look like it is some requirement to charge this to you. The postcard says This fee helps AT&T recover costs associated with providing state-to-state and international long distance services including expenses for national regulatory fee and programs and connection and account servicing charges (whew that's a lot of "ands"). They do say at the end that it is not a tax or charge required by the government.

I checked with one of my old AT&T friends and he told me he believes it was instituted to help telecommunications companies keep lawyers on staff to fight the Government. I'm laughing as I type this, but he swears that's why its there. When the old pricing group cooked this one up they pitched it to cover legal fees. Of course, the geniuses at SBC know a good revenue generating thing when they see one, so of course they had to raise it to pay for Whitacre's country club and $1 million consulting fees. In case you need a refresher on what this AT&T Tax is, here are a few articles I found laying around:

So, what can you do about it? Well, if I was still a customer, I'd call in to complain and when I did, I'd make sure I'd get a live American rep so I can talk their ears off and jack up the costs to these blood suckers (not the reps, but the senior AT&T management team). Then, I'd figure out a way to move my calling plans around to be as cheap as possible. If all else fails, I'd switch telecom providers, but that's the real catch isn't it?

Back in the day, you could switch long distance carriers, but sadly that's gone. There isn't any competition just 30 minutes from Verizon's current HQ and AT&T's former HQ in Basking Ridge NJ. Your choices are your local carrier (one of them), your cable provider (one of them), and maybe if you are lucky a wireless provider. VOIP quality when I've used it is barely terrible and lord knows I'll never test out Vonage. Thanks to the FCC there is barely any competition for telecommunications services, outside of wireless, so of course AT&T can try to slip a price increase by you.

Back in the day, price increases had to be offset by price decreases. At least when the FCC believed AT&T had monopoly pricing power. Of course now, the FCC could care less while these companies just milk hard earning Americans for a service that unfortunately they have few options. Now, when there is barely competition not back in the 80's when checks to switch were handed out as often as coupons in your Sunday paper (are they even still there?) is when we need the FCC to police AT&T. Thanks FCC. Thanks a lot.

In Wednesday's WSJ I woke to find an editorial piece called FCC TV which reminded me about a post I made a month back called The FCC Thinks Your Parenting Skills Suck. The post was pretty much a typical PardonMyFrench rant, but I unfortunately didn't have a lot of data on the subject, that is until this morning's WSJ. Here are the highlights before I dive into rant #2 on how ridiculous Kevin Martin from the FCC is for trying to take over parenting skills.

The FCC says its authority to regulate TV violence derives from the Supreme Court's 1978 Pacifica
decision. That's the George Carlin "seven dirty words" ruling that
upheld the agency's right to regulate broadcasts because there was no
way to block what was coming into homes or car radios. But that ruling
says nothing about regulating cable. And subsequent attempts to censor
Internet and video game content have been rejected by the courts on
grounds that less restrictive alternatives are available

Some 86% of U.S. households subscribe to cable or satellite TV, and
both services provide conscientious parents with multiple filtering
tools

67% of households have no children under 18 in residence, and those
that do often opt to monitor personally what their children watch
rather than rely on technology.

nearly 70% of children have a TV in their bedroom.

Thanks to the Journal I have more than enough data to back this up. The FCC doesn't have the right to regulate cable, internet, video games, and etc for the what they believe is inappropriate content. That's why it is begging congress to give them the power and you have Democrats like Senator Jay Rockefeller only to happy to oblige or as the Journal wrote "promptly thanked the FCC for its "meaningful guidance" and promised to
introduce a bill incorporating some of the recommendations in the next
few weeks."

This is disgusting. That's a parent's responsibility not a centralized Government's job. As I wrote in that original post, what is a violent show? I can't even let my kids watch nightly news shows when I'm channel flipping (not that I would even have that crap on). Kevin Martin's lame idea to offer a la carte channel programming DOES ABSOLUTELY NOTHING IN HIS LAME ATTEMPT TO REGULATE WHAT COMES INTO YOUR TV. You can find violence on nearly every channel on TV. Leave PBS on too long because your kids were watching Sesame Street and a BBC news programs pops on with loads of violence.

Seriously, the best way for the Government to make sure inappropriate shows don't appear is to leave it to parents to protect their kids and leave it to parents to determine what their children can or can't watch. And, make sure that broadcasters understand that a show's rating means that you can't have breasts popping out in a football game. Kevin Martin and the rest of the FCC must have some other ulterior motive besides trying to drum up work for their bloated salaries, don't they? Stay out of my way, I don't need you to help me be a responsible parent.

Ok, so this isn't exactly fresh news and has been reported in a number of places including the Wall Street Journal a few days back, but I just have to make this post critiquing Vonage's lame attempt at running a print ad campaign to highlight how they are champions of competition. Let's take a look at the almost always ridiculous Vonage press release:

Vonage today launched a national grassroots communications campaign to
educate and mobilize consumers about preserving the freedom to choose
their phone service provider. The campaign, called "Free to Compete,"
will raise awareness of the importance of consumer choice.

"We want to highlight the choice that Vonage offers to the public: a
choice to receive great phone service at a great price," said Jeffrey
Citron, Vonage's chairman, chief strategist and interim chief executive
officer. "We think this issue warrants national attention because when
competition is stifled, consumers literally pay the price. Vonage is
the target today, but what other innovative companies might be next?"

First of all as Wikipedia points out: "Agrassrootspolitical movement is one driven by the constituents
of a community. The term implies that the creation of the movement and
the group supporting it is natural and spontaneous highlighting the
differences between this and a movement that is orchestrated by
traditional power structures." Some grassroots movement right? Plus, it is ridiculous to think that Vonage needs to point out the importance of consumer choice. So, let's see how important the community thinks of this grassroots movement:

As you can see from the Alexa chart, their movement peaked back on April 26th which coincides
with their ad campaign and now like their stock price is sliding down.

As of right now they have two customer videos loaded and three email submissions on the site; these are probably all friends of their PR manager. Notice how the videos are professionally edited and how they look into the camera? That is really smooth looking consumer generated content isn't? Maryann looks like a professional actress...

Their awesome CGC videos on YouTube have 732 and 3,240 views proving once again that just loading up commercials in YouTube is a worthless endeavor. What's even funnier is this real consumer generated content that shows up in the toolbar to the right of their videos (because it is related) ripping on Vonage. Of course this video has twice as many views.

I wonder how many people have actually signed their petition when you remove friends, family and agency testers..

So not only is this not a grassroots movement it looks like it is not resonating with people anywhere. Plus, as I noticed when I saw one of their wasteful ads in WSJ but GigaOM beat me to the punch with a post, they had their ads edited by the Wall Street Journal before they allowed it to run. The line removed was "Now, Verizon has chosen to attack Vonage in the courts. Why? Could it be all about the money?" As someone that has been dragged kicking and screaming into print campaigns, this garbage ad cost them at least $90K per page and to top it all off they were so quick to flush their marketing dollars down the drain, they couldn't even work in a day or two for WSJ approvals and re-edits.

Some grassroots movement huh? The money wasted on this could have gone to keeping someone's job until the company goes bankrupt or is bought by Sprint, or improving whatever is left of their service, or just trying to flow it to the bottom line to give any investors a little bit of a surprise bump in stock price. This just another desperate attempt by a company that is hopelessly lost and if I had to guess this is just their CEO trying to save face with investors...

I woke up yesterday morning after my big night out in NYC to see this article in the WSJ called Vonage Says Patent Suits Could Lead to Bankruptcy and I was surprised because that's not their normal press releases that look like celebrations. Oh wait, this wasn't a press release, silly me, this was something buried in a SEC filing where you need to be more methodical and realistic because the Government reads it. Did their press releases which is their news to the community at large even mention doom and gloom? Let's take a look at their recent press releases:

March 23: Vonage Enjoined: Company Expresses Confidence....Mention of bankruptcy? No. However we get this: "We are confident Vonage customers will not experience service
interruptions or other changes as a result of this litigation," said
Mike Snyder, Vonage's chief executive officer.

March 26: Vonage Comments on Recent Court Proceedings....Mention of bankruptcy? No. What do we find in that press release? The following upbeat messages...."To paraphrase Mark Twain, the rumors of Vonage's death have been
greatly exaggerated," said Mike Snyder, Vonage's chief executive
officer. "Friday's events represented one small step in what is sure to
be a long legal battle. "The fact is we've been preparing for
this verdict and the possibility of an injunction for months," Snyder
added. "For the market to react the way it did to the recent rulings
shows an unfortunate lack of understanding of the judicial/appellate
system, a lack of appreciation of Vonage's resourcefulness, or,
perhaps, both. Anyone who's counting Vonage out is making a huge
mistake."

April 9:...Vonage Continues to Operate as Usual Mention of bankruptcy? No but you do get this nugget from them: Vonage will continue to provide digital telephone service to
existing customers indefinitely by paying into escrow a quarterly
royalty of 5.5% throughout the appeals process. Separately, the
District Court required Vonage to post a bond of $66 million to secure
Verizon's damages judgment. Vonage is pleased that existing
customers will not experience any interruption in service. The Company
continues to believe it will succeed on appeal and continues to work on
designing around the Verizon patents.

Now onto their SEC filing from April 17th that you can find here. I'll have the details of the filings on the post continuations because this post is getting too long, but in summary it talks about massive layoffs, bankruptcy, lack of new customers, failure to maintain a stock price to stay on the NYSE, and other horrible results.

You know why I'm so fed up with this? I've seen my PR and corporate communications co-workers put these together and it takes weeks even to just get final approvals from compliance and legal which means while they were releasing these upbeat releases they were working on this doom and gloom end states for the SEC filing. And, I wonder how much they tell their customers. Did they send out an email or call them? I'm guessing no.

This is just more magic tricks from this joke of a company trying to get as much money out of investors and customers before they go belly up. Shameful and disgusting.

PardonMyFrench,

Eric

P.S. One more article from the WSJ called With Vonage, It's Risky to Follow the Leaders which talks about their insiders buying and selling Vonage. What's funny is this gem at the end of the article "InsiderScore.com research director Ben Silverman said that while
insiders have been active buyers, hedge funds and institutional
investors haven't been. "There has not been institutional support for
the name," Mr. Silverman said. "It seems pretty rare to me that you see
a stock that hated."

No, not by that ridiculously run company, but by their ex-CEO Michael Snyder who jumped off that sinking ship and left the architect of this disaster Jeffrey Citron in charge to go down with it. You can read the details in this WSJ article called Vonage Says CEO Resigns, Sets Cost-Cutting Plans or if you want to read the details in an always entertaining PR release from Vonage you can find it here. BTW - Vonage must have two PR authors - the one that takes happy pills before they write a release or the one that is more rationale and writes realistic releases.

Not only is the CEO getting away, they are cutting marketing costs (geniuses right?), general and administration costs (read head count reduction), and still have problems with Verizon. They did say they had an average CPA of $275 which is still horrible in the telecom world (it should be way under $100) and their churn is awful at 2.4% and that probably doesn't take into account all of their patent problems which just started creeping up.

This company is going down fast and surely the only reason Citron is taking over is because he has a personal stake in not just money, but in his own personal reputation with some serious investors. For an interesting spin on this, read this link that I posted a few days ago called Vonage: The Conspiracy Theory. You'll see this interesting view:

Despite all the King's men (major phone companies for this story)
out for blood against Vonage I can't help but think these major
investors would like to get their money back. Not only would these
investors like to get their money back, but these guys want to make a
profit, they want a good ROI (Return on Investment)......Even Enron went on for years before the scandal erupted and the
investors and board of directors made millions before they lost
everything. How many companies do you think faced similar fates but
the news just never got out or received the attention it deserved?

Vonageland where PT Barnum like exaggerations of losses in courtrooms appear to be monumental victories for this company conjuring up visions of Barnum hoaxing people into believing he actually had George Washington's nanny on display.

Vonageland where they turn customers into investors only to have their stock get pummeled and in the process, lining the pockets of brokers, financial advisors, and of course the founders and CXOs of the company. At least for all of Barnum's hoaxes he believed deep down he was entertaining people; there is nothing entertaining about losing your shirt on a stock.

Well folks, it looks like Vonage is finished, or nearing the end. As this NY Times article explains Vonage was given a death sentence and then a temporary reprieve from the gallows prompting them to finally get real with their press releases by announcing that Vonage receives temporary stay in Verizon patent litigation, continues to sell service. I guess even their PR department can see the end because they didn't issue a classic Vomit release like "We Won and Continue to Win in Court!!!" You know, it is never a good sign when you see a press release saying that you can temporarily add new customers.

Anyway, what gets me is at the end of the article there is this mystifying quote from Gigi Sohn a lawyer with Public Knowledge a firm that clearly doesn't have much when it allows this quote to get out from Ms. Sohn "Any time a company is told they can’t add new customers it’s pretty
serious,” Ms. Sohn said. “I’m not sure the judge fully understands what
this could do to a relatively small company like Vonage.”

Ms.
Sohn said Verizon was unfairly using its patents as a competitive
weapon. “I think Verizon is pulling out all the stops to put Vonage out
of business,” she said.

You know what? I think the Judge knows that when a small company steals patents and misleads investors and customers regarding their product, he knows exactly what it can do. It will put them out of business which is where they belong.

It seems I spoke (really wrote) too soon and the Vonageland PR writers were back to their usual stunts. From today's press release we get this award winning fiction from their PR team: "Vonage Holdings Corp. (NYSE: VG), a leading provider of broadband
telephone service, today stated that it views the Court of Appeals'
granting of a temporary stay on Friday allowing Vonage to continue to
add customers as the first step toward resolving this matter in
Vonage's favor. The stay will remain effective while the Appellate
Court considers making the stay permanent."

Ahh, back to one of my favorite subjects, Vonage. Sorry I didn't post this sooner, but besides being in meetings on Friday, I had family obligations all weekend long.

On Friday Federal Judge Claude Hilton agreed with Verizon that Vonage shouldn't be allowed to use Verizon's VOIP technologies, but gave them two weeks to come up with a work around and/or come up with a reason to stay the execution, err I mean injunction. Of course, this probably won't kill Vonage, but perhaps their looming suit with Sprint might. This ruling sent the stock down to $3, but as of Monday showed a little bounce. I guess traders figured this wasn't the death blow, yet or was convinced by this Vonage press release.

Yes, a Vonage press release which should only be read when you had a few cocktails or when you are so depressed that you need someone else's misery to brighten your outlook. The title is classic which is solely aimed at the traders to boost the stock price while people in the company cash out. " Vonage Comments on Recent Court Proceedings, Outlook for Appeal and Market Overreaction" with a subtitle that the company is confident in their appeal. Nice, a press release solely directed at traders to boost their stock price and to brag how they knew this was coming and prepared accordingly. Yes - just like the Titanic prepared to hit an iceberg.

And, just in case you missed it - according to the press release "Vonage's accomplishments continue to validate its business model and
strategy. The company has achieved 19 consecutive quarters of double
digit revenue growth, doubled revenues to $607 million in 2006 alone,
and added nearly 1 million net subscribers last year." Wow, that's great, right and of course all of those other people that have been dumping this worthless piece of stock are crazy right? Yes, well they neglected to tell you that their brilliant strategy lost $266 million last year.

Oh and that customer count they bragged about? Well, their churn was still high for 4Q last year, but it was slightly better because these geniuses decided to leave more people on their service by increasing the grace period for non-payment. "As part of our effort to improve customer satisfaction and increase
retention, we extended our customer grace period for non-payment in
order to better resolve customer accounts that may be past due. This
increase had a one-time positive impact of 10 basis points on our
average monthly customer churn for the fourth quarter." Or how about (via the same financial release) that their average cost per sale was $249 for the year, $306 for the 4Q all while lowering marketing costs. I've said this before, optimizing a marketing campaign should never result in a raising of CPA unless of course you are completely clueless.

Ahh the Vonage press release. Why issue this? Who knows but the one thing Vonage has been successful at was getting uninformed investors to buy into this worthless company from day one and why stop now? Please tell me you have some master plan for recovering any money from this or that you somehow bought at $3 and are waiting for a big day in the market to make your 10% back or so. One of the many Jim Cramer sayings that I've always remembered is "Bulls make money, bears make money, but pigs get slaughtered." Here's hoping you have a plan, little piggie ;-)

I know two Vonage posts in a day, but their press release is laughable. Seriously, this is the type of commentary that gets investors confused. That's why you must get different points of view whenever you invest your own hard earned money. That's why I stressed to you this week in a post called Only The News That's Fit to Sell, that you need to read multiple sources if you are concerned about a subject or want to invest in stocks. Here's what the brilliant PR folks at Vonage said about their ruling yesterday:

Vonage Vindicated on Four of Seven Patents

HOLMDEL,
N.J., March 8, 2007 /PRNewswire-FirstCall via COMTEX News Network/ --
We are delighted that the jury rejected Verizon's meritless claim that
we infringed their two billing patents. Of the seven patents Verizon
originally sued on, they prevailed on only three and we expect that
verdict to be reversed on appeal. The jury's damage award represents a
70% reduction from Verizon's $197MM claim. The jury also unanimously
rejected Verizon's claim that Vonage willfully infringed its patents.

In
addition, we don't believe there is any basis to support Verizon's
request for an injunction and we will have the opportunity to present
our position to the trial court shortly. If the trial court does impose
an injunction, we will seek an immediate stay from the Federal Court of
Appeals. Vonage's customers should see no change to any aspect of their
phone service.

That's awful and misleading and before you say "oh come on you are too harsh"
read it again and figure out what they are selling. They are selling that their service will still be good and that you shouldn't dump their stock (which people are doing right now). Just more bad spinning on an awful stock.

I was looking through my posts the other day because I had quite a few visitors read through the best posts tab at the top and I thought, hmmmm I haven't written a What The Vonage Post in a while. And those my friends, are some of your favorites. Anyway, I'm obviously up very late due to a late dinner and I was reading through my RSS Feeds and saw this article from Business Week called What the Verizon Verdict Means for Vonage. And of course this just made me sick....

Its not bad enough that their phone quality and customer service suck, or that their former marketing plans were wasteful and untargeted or that they screwed their own customers in investing in a worthless company, now they lost a patent infringement lawsuit versus Verizon and have another one pending with Sprint. This my friends is a poorly run company and why you MUST READ THE PROSPECTUS before you invest in an IPO. I'll explain why later.

According to the BW article, What The Vonage must pay $58 million dollars in damages plus a whopping 5.5% per subscriber per month. On top of that an injunction will most likely be handed down and if that doesn't scare its customers off, I'm not sure what will. Of course this piece of ripped paper for a stock will appeal and most likely look for some company to buy out their remaining suckers err I mean subscribers and put this mistake where it belongs - in the IPO trash heap of all time. According to the article this ruling will add $1.6 per line per month in costs which will further push its numbers in the tank.

Now one lesson for all you wanna be IPO investors is to read the prospectus. If you would have, you would have noticed this paragraph at the top of pager 15..

We may be subject to damaging and disruptive intellectual property litigation.

We have been named as a defendant in three
suits currently pending that relate to alleged patent infringement. See
"Business—Legal
Proceedings—Patent Litigation." In addition, we have been subject to
other infringement claims in the past and may be subject to
infringement claims in the future......

Parties
making claims of infringement may be able to obtain injunctive or other
equitable relief that could effectively block our ability to provide
our services and could cause us to
pay substantial damages. In the event of a successful claim of
infringement, we may need to obtain one or more licenses from third
parties, which may not be available at a reasonable cost, if at all.

Seriously this was bad news from the start and I mean right from the very start. A co-worker of mine at Harrisdirect once said to me back in 2004 that I should look into working at Vonage. I told her, no way, that company is all about price and provides no real value. Of course I was wrong on part of that. It did provide value to the original owners who made a killing on the IPO while you investors got stuck buying a piece of paper that wasn't worth using to wipe down your dirty windshield.

In yesterday's Newark Star Ledger there was an article called Let Us Entertain You which highlighted the FCC's wrong thinking on telecommunication mergers and why they are completely clueless on XM and Sirius' plan to merge. The article's sub-title says it all: Bundled packages catch on. But consumers have yet to see any savings from Verizon, cable TV companies. You know why that is? Simple. When the FCC allowed the Baby Bells to buy up the long distance companies they eliminated their competition. Now in NJ we have none.

I live a 30 minute country drive from the old and better AT&T's corporate HQ that is now serving as Verizon's HQ in Basking Ridge NJ and I have little competition. I have Embarq (the worst brand name ever, but good customer service) for Local and my choice as a competitive alternative is Comcast's crappy bundle. And, since I can't stand cable I use the one alternative presented to me which is DirectTV; that's it folks. Nothing else. Does Verizon have plans to invade Embarq territory? Nope. Phone calls offering me to switch services? Nope. That's long gone. You see as that article pointed out, prices are not going down because there is no competition. Zilch. Nothing. This is what happens when the FCC doesn't have a clue and allows companies to merge, stifling competition.

Now over to Satellite Radio where the FCC once again is traveling down a clueless road - similar to a chicken running around a farm with its head cut off. Every single time someone gets in their car there is competition for that person's entertainment. At my finger tips I can choose between FM radio, AM radio, tape (who still uses that), CDs, and of course XM Radio. If that isn't an ongoing competitive battle for my listening ears I don't know what is.

The other day I was traveling into NYC and needed traffic reports. Wham, I jumped over to AM radio instead of XM's poorly delayed NY traffic. Isn't that consumer choice at its best? Doesn't that mean that an advertiser on AM radio pitched me a commercial? Sure it does.

I don't know how the FCC can justify eliminating the well documented and experienced telecommunication wars where we saw and enjoyed lowered prices; plus, all parties were ready to invade everyone else's business. Now - silence and Net Neutrality problems thanks to the FCC's wrong thinking. (And if you think this has nothing to do with Net Neutrality, you are reading the wrong blogs. It is about controlling access to your household and broken promises). It is this wrong thinking that may cause problems for a product that surely benefits consumers in a completely competitive environment found at an arm's length every time you are in your car.

I'm still fired up today on a few articles found in the WSJ called Sirius-XM's Fate Hinges on Definitions and How Sirius-XM Deal Would Affect Listeners. Both articles screamed to me that folks that don't like this merger or say it isn't in the public's interest don't live in the real world. As I sit and listen to my XM radio, I don't understand how the FCC could allow SBC to buy Bell South and say that is in the public's interest and this deal is not. If Kevin Martin and the rest of the talking heads at the FCC would realize is that when you buy a new car it comes equipped with AM (free), FM (free), CD player (free), Tape player (free but who cares), and Satellite Radio (costs good money per month).

Looks to me like there is plenty of competition right? Satellite radio costs money while everything else, umm, does not. Seriously, how many of you continue to pay for Satellite after the promotional period is over? Not many when compared with new car sales. Unlike the telecommunications arena, which the FCC seems more than happy to re-write who competes with who and what is in the public interest or not, they seem to be resistant to this. I wonder why? Maybe you can use the following reasons mentioned in the first WSJ article:

The radio industry opposes the deal

The FCC could seek eventual return of some FCC-awarded radio spectrums

The Howard Stern problem

Well, if these really are issues that the FCC wrestles with as part of this deal, it looks to me like the have other motives. Howard Stern and indecency? Please, that's ridiculous. I have little kids and they drive in my car. Do you know what I do? I make sure XM's comedy channel is NOT ON when they are in the car. Same as any parent should do. WE DON'T NEED OR WANT THE GOVERNMENT TO TELL PARENTS HOW TO POLICE THEIR MEDIA. As opposed to the Janet-Jackson Super Bowl problem when a football game burst into a boob-fest (parents not expecting this), these channels are well-known by the consumers of satellite radio.

Radio spectrum and the radio industry, hmmm, I wonder what kind of influence this has on the decision making, but if the radio industry opposes this, doesn't that mean they are in the SAME COMPETITIVE industry? Please, this will simplify things for consumers, collapse content so I can get the NFL, and have limited impact on prices paid because these two don't compete with each other they compete with the free equipment that has like 100 years of experience under their belts.

So, of course you have heard by now that XM and Sirius want to merge together to form one company, but the folks at the FCC, according to the WSJ, will face a high hurdle due to the 1997 ruling that created the industry. I also watched the interview found on the same WSJ article with former FCC Chairman Michael Powell and he provided good insight into what can occur. What I don't get is, why the FCC can't see that this is good for consumers?

I've been an XM subscriber for 3 years and have a second one installed in my office. I'm hooked and don't mind paying the monthly fee, so very often I'm asked about the service. Very often I'm asked about the differences between the two and other than the content offerings, I don't think there is much difference between them; a few years back I helped out one of my agencies of record with a pitch
for Sirius (they didn't win it but I got a free lunch
out of it). My car came loaded with XM so that's why I have them. If I had to choose over again, I'd probably pick Sirius because of the NFL package and unique programming channels.

In fact, I owned both stocks up until about 6 months when I cut my losses with XM and used the proceeds to by Archer Daniels. When people asked me which one to buy, I'd always say both because they were the only two in the category. I kept Sirius because I believed they had more mojo, but that was it.

Now, if the FCC doesn't let them merge because of competition or what's best for the consumer, I think I'll vomit. Found on the Powell video was a screen shot from the LA Times that showed that there are 80 million FM/AM users and 14 million satellite radio owners. If that doesn't prove that there is competition than I don't know what will.

How can the FCC approve SBC to buy AT&T and then Bell South and stand behind that as good for the consumer? XM-Sirius doesn't have pricing power because, well AM/FM is free and access to those waves are free - this is the direct opposite of telecommunications and net neutrality. The RBOCs have pricing power which is what scares people on net neutrality; they also own the pipe (with cable companies) while radio does not.

According to the 1997 FCC report and order, the FCC wrote "in the Notice, we pointed out that satellite DARS will face competition from terrestrial radio services, CD players in automobiles and homes and audio services delivered as part of cable and satellite services and asked whether these delivery media, coupled with fewer than four DARS providers, could ensure an effectively competitive audio services market." I don't understand why 2 is competitive but 1 is not when you compete with the services the FCC wrote about way back in 1997.

As a big user of satellite, I think this is great for consumers and will simplify their choices and provide even more content. Unlike the telecommunications world, I don't see how this harms consumers....

I had a great customer experience today with Verizon Wireless and I thought I'd share it with you readers because the background is similar to the awful experience I had with AT&T a while back that caused me to leave a forfeit any chance at all those great services that I'll never see. You see like AT&T, I am not in Verizon's footprint for local and I'll be shut out. I only have one chance for service and unlike the new, new, really we want your business AT&T, Verizon wanted to keep it.

So, here's what happened. Like a good customer, I had online statements and credit card billing (same as AT&T) for my Verizon Wireless service. A month back I had to switch my credit card and went online to do it and received no error message. However, it didn't take so I went back in and updated it again. Then Verizon went to bill me and wham, it didn't take (now 2 months late) so they generated some hate mail and a late charge.

Now I'm upset because I did everything I was supposed to do and still got the cold shoulder. I picked up the phone, called credit and collections, paid my bill, and of course complained to the person on the other end of the phone. She couldn't help me with my credit or bill setup problem, so she transferred me which further fired me up; figuring she was playing the transfer the irate customer phone game.

Now enters customer service woman #2, who got an earful of why I didn't deserve to be treated this way. She agreed, removed my charge, and then stayed on the phone when I went through the process of restarting my credit card billing. Sounds good so far right? Wait it gets better. While going through the process, customer service woman #2 looked up my account and realized my calling pattern changed and I was paying for too many minutes that I haven't used in months. So, she downgraded me which saved me $20 per month.

Now that is a GREAT CUSTOMER SERVICE CALL. Sure Verizon looks like they lost $20 per month, but was smart enough (unlike the new, really bad service AT&T) to value my business and take a longer term view. It is too bad that the FCC won't provide an environment to let these two compete against each other because Verizon would eat AT&T's lunch and have Cingular for dessert - ooops, AT&T already ruined that.

Back in the day, I remember than Chairman of AT&T Bob Allen complained about call quality at AT&T's corporate HQ in Basking Ridge so they installed a cell tower there. I personally stopped using AWS when I commuted from Long Valley to Jersey City along Route 78 and couldn't figure out why I had dropped calls in Newark.

What really annoyed me the most was this comment from AT&T's Senior VP of Advertising Wendy Clark which just seemed like some token research to back a plan that already was started in motion when the acquisition was announced:

“What consumer and business customers want is a single provider of
services for the way they live and work today,” Ms. Clark said, “and if
it’s one company, they want it under one name.”

You know what, I've seen similar research when I was wireless bundle boy with AT&T and the research showed similar results. However, you know what those pesky consumers consistently do? They un-bundle their services. You know why? Companies fail to recognize these valuable customers and with credit card billing you can make these bills go away anyway. Plus, the only meaningful bundle is when the device bundles the service so until you don't need a wireless phone separate from your home phone separate from your TV which is separate from your internet; so, it doesn't matter if multiple companies service you. Finally, the real reason consumers want one company is because they think they will be getting a bottom of the bill discount. There I said it.

Sadly, Cingular will join the brand name scrap heap as soon as
AT&T's Marketing department spends like $100 million to rebrand it. I guess what really upsets me the most is that I won't be there to spend it ;-)

I saw this article called Vonage to Sell Wi-Fi Internet In Earthlink Deal in Monday's WSJ and all I kept thinking was, when will someone offer them 10 cents on the dollar to put this company out of its misery. This announcement is somehow supposed to boost the shares? My friends, Superman could not boost this company. So now they can offer DSL by reselling Earthlink's DSL and bundling it with Vonage. Wow. I'm sure this will be another losing proposition for share holders as well as customers.

According to the article Earthlink resells their DSL usually for around $10 and Vonage sells their service for $24.99 per month. As someone that personally designed home calling and internet bundles back in the mid to late 90s for AT&T, I'm sure this bundle will either be $44.99 per month or if they are really crazy and can pull the wool over their CFO's eyes, maybe $39.99 per month. The problem with this bundle is that it is going to be way too complicated for a non-techie person to understand and install without significant help and that means customer calls which will eat into profit (if they even built any in to begin with). This bundle needs new equipment, a tech to come out to the house for the install, and a software install. I'm guessing it won't be their tech which means increased costs. I'm pretty techie and it took me many long nights on the phone with Sprint (now Embarq, the worst brand name ever) to get my DSL installed properly. Bundle care and billing is quite difficult to pull off and depending on the bundled price point they offer, this deal will probably lose money from them with every new ad.

The other comment which I found funny is this quote from Vonage's Chairman Jeffrey Citron regarding AT&T's stand alone DSL forced by the FCC when they tried to extract net-neutrality language from AT&T/Bell South merger (which they did not do) "The phone giant agreed to offer stand-alone DSL Internet service -- one
form of broadband -- for $20 or less per month, rather than requiring
consumers to buy phone and Internet service in a package. "That opens
up the market for us dramatically," said Jeffrey Citron, Vonage's
chairman and chief strategist."

You know why that is funny (sad kind of funny)? Because it opens up another small market of people that don't realize they are getting ripped off by that slow DSL offer and who might be convinced with some slick advertising what a great deal Vonage is. I'm sure this will (not) help their 2.6% monthly churn problem, but what they really need are price conscious techie people, but they are not going to be on slow DSL and won't be swayed by funny advertising.

I just don't get it. What am I missing here. The FCC lets AT&T off the hook when it comes to any real net neutrality conditions (see this post called AT&T Knows When to Fold 'em and comments that follow) and allows the purchase of Bell South to go through. This is definitely not a victory for consumers and can only help the pipe owning RBOCs. What gets me is that the only thing and I mean the only thing that matters is the last mile to the household. And, what this merger does is allow AT&T to buy up more home lines to charge whatever non-competitive rates they want with no repercussions and no reason to go invade other territories.

Back in the day (circa 1998) there were plans for RBOCs to invade LD and for LD companies to invade RBOCs. Not so anymore. You aren't in their territory you get nothing. No offers. No good TV service. Just crappy stand alone DSL or Call Advantage. Don't believe me? See this screen shot for the lovely offers available just 25 miles from the old and better AT&T's HQ and current Verizon HQ. Verizon is worse with only DSL available in my area but because I'm on the border I have some long term hope.

You think you are getting some great smoking Wireless now that the geniuses at the current AT&T are going to rename Cingular to AT&T Wireless? I doubt it especially if you are out of territory. Back when I ran wireless/LD bundle marketing programs for AT&T the reason we did it was that we can offer discounts to keep people on multiple services. The new, new, new gosh we promise we won't do no evil AT&T won't do that unless they already have a pipe into your house. Why? There is no reason that they couldn't have offered something in the past if you were out of territory. This BS mentioned in the article about having a partner was just a convenient excuse to get the deal through - "With full control of cellphone operator Cingular Wireless, formerly a
joint-venture with BellSouth, the San Antonio-based phone company will
begin selling AT&T-branded wireless services to its large pool of
corporate phone and Internet customers, allowing it to offer discounts
for bundles that were impossible when Cingular was a separate entity."

Why do I think this is BS? Well back in the early days of bundling, the old AT&T had the same problem in certain regions. I believe we had a deal with Airtouch (might have been PAC Bell - my memory is fading as I approach 40) and I got on the phone to negotiate special offers for our customers in that territory with my Airtouch counterpart who was only too happy to cut a deal to get customers. To top this announcement off, it mentions how AT&T will want to sell advertising on wireless phones which will of course do wonders for reinforcing the previously bad customer service that the old AT&T Wireless name had, especially in the NY Market.

This deal is all about letting the owners of the last pipe to the house, hold on as long as possible until a better service comes along. Meanwhile all the people stuck out of territory,on basic land line service, or further out on the TV roll out schedule get shafted with uncompetitive service and prices until a better day. If the FCC thinks that this deal is ok, then why not let AT&T buy up all of the other RBOCs and let Comcast buy up all the other cable companies? How do you think that will go for consumers?

Part 2 of my post started yesterday. I figured you don't like to read long articles so I broke it up :-P

Now, you might be saying, oh come on you are being too tough on them. It is a growing market, right? Yes it is. According to the FCC,
there were 24.7 million cable lines at the end of 2005 which was a 3.4
million increase over 2004. With Vonage's customer base at 2,057,844
that is a less than 9% penetration. (I didn't count DSL because you have to keep a line to maintain DSL to have Vonage go over it; pretty much wiping out your savings.) I know rough math and I mixed
annual numbers around, but give me a sec to prove this out. According to Comcast,
they added 483,000 voice customers during 3rd quarter 2006 and since
they are one of many cable companies with this service, you'd have to
assume that going forward, Vonage will not be able to keep pace and
will fall behind. And, that doesn't even factor in Skype. Besides Vonage's lousy marketing, they have probably hit their peak market
penetration and the cable companies will continue to out market share
them going forward.

Next, when I was surfing the internet I got hit with this horrible pop-up ad. I guess the geniuses that brought you an increase in CPA with a budget cut figured that they would borrow a page from the X-10 Camera playbook and start running pop-ups. The problem is that a) people hate pop-ups b) they most likely get hit with a filter c) people really hate them. Back in the day, the X-10 online marketing manager was a real genius because they sold tons of these on the internet and for the most part pop-ups work for ROI focused companies that can make these leave behinds
fun when they embed their marketing within a game. Or in X-10's case, sex. The problem with the Vonage ads is that they are both boring and annoying. And, to top it off, pretty much every line has some sort of caveat on it. My favorite part of this horrible ad is the line that says "Save up to 50% or more". Please, how does someone save "up to" and "or more" at the same time? It is this kind of language that helps fuel churn and that's in addition to the cash offer borrowed from an old MCI winback strategy of - when all else fails, use cash.

What the Vonage is going on here? Clearly they can't sell this service without spending a ton of money to pay people to take it. They have share pressure from all over including Skype and may have enrolled as many tech junkies as they possibly can. Their strategy and marketing plan looks to me like someone used a ruler to extrapolate their early numbers and said - "look at all the money we can make", forget about competition and customer service. I'd say in 2 years or in the next economic slowdown, Vonage will be gone leaving behind their rich founders and poorer investors.

Yes. It has been a long time since I visited with my second least favorite telecommunications company, Vonage. Quite frankly the reason was I get a little bored with the subject and move onto something else. However, day after day I receive visits from people searching on subjects like "vonage complaints site" (today), "vonage pop-up ad" (12/26), "vonage marketing complaint address" (12/25), and etc - you get the idea. The people have spoken (or searched) and who am I to disappoint my fans.

So, what have been holding back? A lot. First off, this moronic, idiotic commercial with the pretty blonde getting hit on the head with a Vonage box. Yes. It has been around for a while but it still bugs me. Why? Well clearly they are making her out to be dumb, but even after she gets hit in the head with the box, she still acts stupid by running into the water to play with the sharks. Seems to me the shark playing blonde is a metaphor for all the Vonage customers who got swindled when they bought into the Vonage IPO. I think the ad is more insulting to these customers than to blondes everywhere in the world.

Next up, I've been noticing that Vonage has been
cutting back on their online advertising spend. Back in the day, they were the number one waster, err I mean, spender in online advertising. One would think that with the ROI potential of online and the fact, that their service works with, umm, broadband customers, that they should be able to manage their marketing spend. As this chart shows courtesy of TNS by way of ClickZ, they have cut their online marketing spend to 55% over a year ago. So, with that chart, you'd think they were reducing their cost per acquisition, right? Wrong. These marketing geniuses saw their cost per subscriber go UP by 6% over 2nd quarter to $254. I can tell you one thing as someone who has managed plenty of marketing campaigns in the telecom world is that when you starting trimming your budget, your CPA should go down; the last piece you should cut are good performing programs. Oh by the way, their churn also went up by 13% to 2.6% due to this lame reason "The increase is attributable in part to the rapid growth in subscriber
lines throughout 2006 and resulting impact on customer care." Nice.

See tomorrow for Part 2 (yes it is already written). BTW, if you are looking for the Reagan/MSN post, scroll down to about the middle of the page or hit this link

I know it must be tough for you these days as the last check into this bad for consumer deal between the new, new, we swear we won't do no evil AT&T and Bell South. Especially now that Robert McDowell decided to abstain from voting on the merger which results in a 2-2 tie between Republicans and Democrats at the FCC. Wow to think how billions hang in the balance between 4 people. That's quite a challenge, so let me, as a 10 year veteran of the old and better AT&T give you some advice. Sure this is free, but if you study the downfall of AT&T you will realize that the current uncompetitive environment is much of a result of bad management by C. (how) Michael (bought Excite@Home and TCI high and sold them very low) Armstrong and lies and underdeliveries by the Baby Bells of the promised made in the Telecommunications Act of 1996.

I submit to you my recent experience with home service in beautiful Long Valley, NJ which is a mere 30 minutes via a country road to the old AT&T HQ and now the current Verizon HQ in Basking Ridge NJ. Back in the day when that building was filled with veterans of the long distance wars, people actually switched carriers and received offers. In fact, towards the end of my time there we had plans to invade the local business and the Baby Bells had plans to invade ours. I can remember the first time Bell Atlantic/Verizon actually started appearing on outpic reports (just in case you don't know what an outpic is that's when someone actually switches their LD carrier). A funny thing about Long Valley is that both Embarq (the worst brand name ever) and Verizon split local service here. You can bet that Verizon would love to have the whole town, but sigh they don't want to invade the territory because well they don't have to because why rock the boat. This is what happens when regulators like yourself allowed the telecommunications industry to become an oligopoly - the kind where prices don't drop because they know the outcome - no response.

So what did I get as an credit card billed, online care, all you can eat long distance customer that never bothered AT&T when I wanted to switch? Nothing. Zilch. Oh I did get a lousy customer service rep located in India who after giving me my outpic (there's that word again) confirmation number offered to give me 7 cents instate LD for a lousy monthly fee (ugh), AT&T CallAdvantage (why would I want crappy VOIP), or get this WorldNet dial-up (words can not describe the futility). I thought for a second the rep was going to offer me cash to stay (you remember those tricks), but then he caught himself when he realized that I was out of territory (probably forever) so I can't have local or their great TV service that may arrive by 2020. He could have offered some wireless offer because I used to have AT&T Wireless Service back when I was AT&T's bundle boy, but sadly, the new, forgetful AT&T doesn't care about bungling, err I mean bundling wireless and LD anymore.

Why the lack of save programs or wireless bundles? Simple. There is no competition in a state like NJ and won't be for the near future. And, that Mr. Martin gets to the heart of the Net Neutrality argument. Yes. Net Neutrality. See I agree in concept that if you lay the pipes for high speed than you should be able to charge whatever you want. What makes this easier for the Baby Bells is that they are allowed to have a virtual monopoly in a region and charge whatever they want for local service, because there is no competition. They don't need to waste valuable dollars in customer care or marketing or promotions because they don't need to. What's an angry customer supposed to do? Switch to the equally frustrating cable companies? Yeah right. Fact is Net Neutrality is an issue because they are controlling both ends of the pipe thanks to regulators like yourself who hide behind free markets that don't exist (take some notes WSJ).

Yes, I do believe in our economy, free markets, and that if all things being equal, competition will give consumers more choices and better prices. However, it doesn't work when you allow each Baby Bell to have a virtual monopoly in their territory, resulting in no alternatives for consumers. Use your own experience and see if you can switch services. Competition doesn't exist and this merger shouldn't be allowed to go through without significant concessions.

I saw this article called Supreme Court Case on Baby Bells May Affect Antitrust Enforcement in Tuesday's Wall Street Journal and my reaction was - of course they did everything they could to stifle competition; the problem is, as the article points out, is to prove it. I didn't spend much time on the old AT&T's local side of the business and from 1996 (Telecommunications Act) through 2000 I was either wireless/LD bundle boy or implementing AT&T's consumer online marketing strategy*. However, as wireless bundle boy I was often in meetings with the managers of the local offers who tried to convince me to add local into my marketing mix; unfortunately, I didn't agree because it was hard enough selling wireless plans on the phone let alone adding in local.

So, that's a long way of saying that I didn't have the plans and don't have any documentation, but here's what I do remember. In the early days of the Telecom Act, AT&T tried to resell local service in very competitive states like Connecticut. However, AT&T was buying the service from the LECs at retail rates with a discount on top of it and then offered this bundle to residential customers. Basically, an expensive white label product from AT&T's enemy at the time. Of course when you lumped marketing and promotional costs on top of this product, AT&T quickly started losing money. And, when C. Michael Armstrong came in as AT&T Chairman, this practice stopped and then we move to selling local service via UNE (unbundled network elements or buying individual parts of the local service and then repackaging them). The LECs then tried to set their own resale prices to force AT&T out while capturing the long distance market.

I left in June 2000, but in the end we know what happened which was MCI collapsed due to playing with their books and the old AT&T stopped marketing to residents to pretty themselves up for purchase by SBC which formed the new, new, new, really it is new AT&T. For a little more history, check out Armstrong's speech given to the Senate in June 2001 on the state of telecom competition.

This reminds me of two stories. One was back in 1997 when I interviewed for a marketing position with Teleport a competitive local company for businesses headquartered in Staten Island. Besides being very late for the interview because of a major accident on the Outerbridge Crossing, I took one look at a US map of their local service and thought to myself, AT&T is going to buy Teleport and I'll end up right back where I started. Of course, when the CMO asked me what I thought of the company I mumbled something about the commute instead of telling him the truth.

The second story had to do with sticking it to a Division Manager named Andy M. who was walking along the long third floor corridor on his way to see then head of Consumer Long Distance Jack McMaster when I caught up with him. I was also on my way to see Jack to talk about career plans when Andy decided to smugly tell me that I was sure to get bumped because he had more important things to discuss with Jack namely to brief him for his meeting with Armstrong on AT&T's 7 (or 9) State Local plan. Jack of course took the 15 minute meeting with me and we talked about the Yankees, my career, a promotion, and general guy talk. 6 months later Jack made good on his promise and promoted me to Division Manager.

Anyway, back to the article. So while I have no concrete proof, I saw from AT&T's perspective the LECs putting up stumbling blocks. At the end of the day what really matters is local competition right? Well, according to this chart from the FCC local competition peaked back in June 2004 and now is on a downward trend. And, that peak reached 14% of all lines nearly 8 years after the Telecom Act of 1996 was supposed to foster competition. Think it doesn't matter now with VOIP, wireless, cable, and etc think again. The LECs get pricing power without any real competition and that really gets to the heart of the Net Neutrality Issue.

Yes, the bad service continues but obviously based on AT&T's last earnings call which featured a 74% increase in profit they obviously don't care. You know why they don't care? Simple, they are in acquisition mode and buying up all of the competition. According to this article in the Wall Street Journal, voice revenue was way up and data almost doubled in revenue; heck even directory assistance revenue stayed flat. You know why you can keep revenues like DA flat? It is because there is no competition.

Sure, the FCC and the Justice Department are betting that eventually there will be this all out battle for your TV set, wireless, and phone but that's a long way off. For example, according to the article, AT&T has about 3,000 subscribers for its high-end TV/internet service - wahoo. In the meantime, they get monopoly style pricing as they squeeze everything out of their wireline business including decent service.

Back in the good old days when a customer like me called into complain about why they were still receiving a bill, that was a sign to try to win me back with promises of good service and an offer or two. Nope, not anymore.

When I called in, the rep "tried to explain to me" why I'm getting an error message (see this link) when I call. When I tell him AT&T already admitted their mistake, he put me on hold for a second. Then the uncustomer service rep goes through his "save pitch"...

Bad Offer #1: "How would you like dial-up service?" My answer: You still actually sell that piece of garbage?

Bad Offer #2: "Well how would you like AT&T Call Advantage?" My answer: You treat me like crap for wireline, why would I think the service or product would be better for VOIP?

Bad and Final Offer #3: "How about $3 off your local toll calls?"

That's it. That's their script for a long time AT&T customer. Of course, I used to also have AT&T WorldNet for dial-up and AT&T Wireless Service. Heck, I launched the bundling of wireless and wireline services while I was with the old and better AT&T.

The amount of wireless, mobile web, internet, TiVo, and wireline usage I have would make Bill Gates salivate, but all I'm worth to the New, New, New, Trust Us It Is New AT&T is $3 off my monthly toll.

This is the first and only customer service call I've made to AT&T for as long as I can remember. I paid all of my bills via credit card and used e-customer care from the day it was launched via AT&T One Rate Online. In fact, the very last pricing plan I built for AT&T is still being promoted. The plan AT&T 5 cent eWeekends is available and obviously must be popular. I remember fighting to get that offer through the Pricing Department.

Hopefully, that's my last call into AT&T forever. I'm obviously not worth anything to them over the long term because I'll never be in their footprint unless the government lets them buy up all phone lines in the US. Think of the net neutrality problems when that day arrives.

I was an employee of the old and better AT&T for 10 years; my final title was Director (really division manager in the old titles) e-AT&T where I managed our online consumer marketing group. Prior to that I helped build and launch telecommunications first wireline/wireless bundle called AT&T's Personal Network. As part of that bundle we created what we called Genie customer service reps. These were our best representatives and they were trained to handle all aspects of your telecommunications needs - long distance, wireless, 800 services, rewards plans, and whatever else you need. As VP Jack McMaster described when we had a meeting with him - the Barbara Eden version of Genie. In fact, the reps were so good and proud of their service they started calling themselves Genie reps.

Fast forward 7 years to a telecommunications world lacking in competition and of course customer service. A world where the new, new, new, really it is new AT&T provides terrible customer service. Sadly my Genie reps are now probably laid off.

For the past month when we periodically made an instate long distance or long distance call, we'd get the following error message "the carrier you selected is unable to compete your call." Thinking the problem was Embarq (the worst brand name ever), I placed a call to their customer service who told me it was not their problem and I should call AT&T. I told them I worked there for 10 years and it is most likely your problem, probably someone trying to get my Long Distance. I called AT&T and they confirmed (or lied) that it was Embarq's problem because they are seeing a notation on my account that says LEC Denied. Ahha, I said to the AT&T rep, it is Embarq's fault and I called back. Embarq was helpful, opened up a trouble ticket and told me to call back in whenever I hear that message. That call was today.....

A while back I made a post called Since When Is The Net Neutral? and it generated a lot of great comments. At the end of the day, the conclusion I came to with the help of PCLiberal (whoever he is) is that we are losing the battle of the last mile to the household and the rallying cry of net neutrality should be about local competition and not about content or hampering the little guy. The issue was dead for me from a post perspective, because well, once a topic gets too hot and picked up by bigger sites I don't look original any more.

Well, my fellow MarketingProfs blogger Ann Handley wrote a good post called Dumb is The New Smart and it has to do with using humor to discuss boring, but important subjects like Net Neutrality. Without stealing Ann's thunder too much, I republished my comment below. As you can see, when people use humor to discuss important issues based on facts, it can become very effective. When humor is used to confuse people or distort facts for the sake of making it funny is when it becomes an issue.

Good post Ann. I went through the site and I agree with you that using humor to tell this boring story is a great idea. What I like best about this is that they do a great job of getting to the heart of the issue which is the RBOCs have a legalized monopoly at the local level and now command pricing power at our access points. That's the heart of the issue and not if you are going to have access to content.

When I was at AT&T (the older version), we had plans to compete at the local level as I'm sure MCI and Sprint did. Sadly, the government allowed the SBCs and Bell Atlantics (Verizon) of the world to buy up the competition and form giant telecom companies. So these guys are dead on accurate.

Anything that gets the real message out and steers it away from the content argument is a great idea. If it makes us laugh too, well it is better the crying over spilt content.

Way back when I was working at AT&T, I volunteered to work on two double secret probation projects called Cheetah and Panda. These were AT&T's first efforts to market cellular (Cheetah) and paging (Panda) to the AT&T long distance customer base. We in the LD world had to work with our McCaw cellular counterparts in understanding the products, offers, and incentives to create the direct mail piece, inbound call scripts, and TV ads. This was back in 1995 when you didn't have wireless gizmos attached to your body and hardly anyone understood how the product worked.

The group we had was very small, and as I recall there was only one marketing manager (me) on the project and my job was to write the marketing brief, review creatives, work with sales execution, and negotiate the offers. Two big decisions I recommended were the use of 1800336TRUE for inbound calls and what I believed was the first official use of a free cellular phone with a new account sign-up. Both were significant because people never forgot that 800 number (AT&T finally shut it off last year in 2005) and the free phone offer is often the price of admission into wireless service. One other recommendation I made which was shouted down was comparing service with our competitors. I was told that Craig McCaw called that antenna chasing and with a growing market it wasn't needed.

As this Sunday NYTimes article explains, now with over 70% penetration in the US, cell phone carriers now focus ads on each other in order to steal market share. What was once taboo in the industry now looks common place as I must have seen the Sprint/Nextel wireless data card ad (mentioned in the article - see ad below) about 100 times while watching football this weekend. I'm sure with this strategy shift, you'll see more offers to switch, better promotions, and better prices. It used to happen in the LD world, but with mergers that the FCC allowed to create super local/LD carriers, those incentives have long since evaporated. I'm still waiting for a phone call from my local provider Embarq (the worst brand name in history) to call me with an offer to switch.

Well, at least we consumers can enjoy some good old fashioned name calling, promotions, and fun advertising in the wireless world. My antenna chasing idea wasn't so bad, it was just 10 years ahead of its time.

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